Bloomberg Law
Dec. 29, 2022, 9:00 AM

Here’s How the Supreme Court Could Impact Creative Trademark Use

Dorothy Auth
Dorothy Auth
Cadwalader, Wickersham & Taft
Howard  Wizenfeld
Howard Wizenfeld
Cadwalader, Wickersham & Taft

The upcoming term for the US Supreme Court includes an ambitious schedule of intellectual property cases, spanning patent, trademark, and copyright law.

The year ahead will see the court release its much-anticipated decision in Andy Warhol Foundation, Inc. v. Goldsmith regarding application of the fair use doctrine to works of art in the copyright context. Three other cases will address trademark protections and enablement in pharmaceutical patents.

Andy Warhol

In Andy Warhol, the parties focused on the standard to apply when determining whether artwork created from another’s original work—i.e., a “derivative work”—qualifies under the “fair use” exception to copyright infringement.

Here, photographer Lynn Goldsmith snapped a photo of the musician Prince for use in a magazine article in 1981. Andy Warhol modified that photo to create a derivative work that he commercialized. The court will decide whether Warhol’s work is sufficiently transformative to render it a fair use under copyright law.

During the oral arguments, Warhol advocated that adding new meaning and message to the original work is sufficiently transformative.

In contrast, Goldsmith and the government argued the copier must go further by justifying why the use of the original work was necessary, or at least useful, to creating the derivative work. The court’s decision will likely impact the copyright protection available to creators of derivative works.

Jack Daniel’s

Jack Daniel’s Properties, Inc. v. VIP Products LLC addresses creative works in the context of trademark law, asking whether humorous use of another’s trademark is protected by the First Amendment.

Under normal circumstances, a trademark infringement is determined based on whether the use of another’s mark is “likely to cause confusion” with that of the trademark owner.

However, when a mark is used in an artistic manner, courts instead use the Rogers test, which is intended to protect the free speech. Unlike the likelihood-of-confusion test in the Lanham Act (Trademark Act of 1946), the Rogers test allows use of another’s mark as an expressive work unless the use contains no artistic relevance or explicitly misleads about the source or content of the work.

As a result, the Rogers test narrows the scope of protection for the mark. Here, VIP created a squeaky toy named “Bad Spaniels,” closely resembling Jack Daniel’s famous whiskey bottle and label.

While the original bottle has the words “Old No. 7 brand” and “Tennessee Sour Mash Whiskey,” the toy humorously proclaims, “The Old No. 2 on Your Tennessee Carpet” which is “43% Poo by Vol” and “100% Smelly.”

Should the court affirm the squeaky toy is an expressive work, for being humorous, under the Rogers test, or should a traditional Lanham Act analysis be applied? The court’s answer may have significant implications for companies that sell items with a humorous message based on another’s trademark.

Bottles of various brands of Jack Daniel’s whiskey sit on a bar counter during a media preview in Tokyo on Jan. 23, 2014.
Photographer: Yuriko Nakao/Bloomberg via Getty Images

Abitron

Another trademark case pending at the Supreme Court, Abitron Austria GmbH v. Hetronic International, Inc., will address the standard under which extraterritorial trademark infringement is actionable under the Lanham Act.

Seventy years ago, the court determined the Lanham Act may cover “unfair trade practices in foreign commerce” where such activity has an effect on US commerce. Since then, circuit courts have splintered on whether the foreign sales must have a “substantial,” “significant,” or “some” effect to incur extraterritorial liability under the Lanham Act.

In Abitron, the question before the court is whether the Lanham Act applies to foreign sales that infringe US-registered trademarks, including sales that never reached the US or confused US consumers.

In the case at bar, a former foreign distributor of US-based Hetronic began selling copycat versions of Hetronic’s radio remote controls, violating its distribution and licensing agreements with Hetronic.

The copycat sales totaled $90 million globally, of which only about 3% reached the US. Will the Supreme Court affirm the circuit court’s finding that 3% of sales in the US is sufficient to subject the entire infringing conduct to Lanham Act liability? The court’s decision here will impact the value of a US registered trademark—and its enforceability around the world.

Amgen

Amgen v. Sanofi, the court’s only patent case of 2023 so far, addresses the enablement requirements for patent genus claims.

These claims are particularly important within the biotechnology and pharmaceutical industries, as patent genus claims allow inventors to claim multiple embodiments (known as a species) of an invention that share common characteristics or structural features.

Recently, courts appear to have grown hostile to patent genus claims. Here, Amgen is seeking to revive two patents containing genus claims directed to monoclonal antibodies invalidated by the court below due to lack of enablement.

The question presented to the court is whether enablement requires the specification to teach those skilled in the art to “make and use,” without substantial “time and effort”—only the claimed invention or most, if not all, of the embodiments of the invention. The court has a chance to curb the Federal Circuit’s current trend in striking down genus claims and spur further investment in medicines.

While other intellectual property cases may also be reviewed in 2023, each of the IP cases currently granted certiorari has the potential to impact world markets.

Warhol, Jack Daniels, and Abitron will affect how people and companies can creatively use existing artwork and trademarks, while Amgen will influence how the pharmaceutical industry protects its commercial products for treating disease.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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Dorothy R. Auth is a partner in Cadwalader’s Intellectual Property Group. She coordinates global IP enforcement, licensing, and procurement strategies.

Howard Wizenfeld is a special counsel in Cadwalader’s Intellectual Property Group. He handles complex patent litigation.

Cadwalader’s A.J. Harris contributed to this article.